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Busan - Finance ministers from the world's biggest economies met on Friday for two days of talks aimed at shoring up a fragile global recovery in the face of the eurozone debt crisis.
The Group of 20 ministers were also due to debate the need for regulatory reform to stop the world plunging into a re-run of the 2008-2009 downturn.
They were engaged in a delicate balancing act: trying to continue stimulating recovery while also reining in massive deficits in some member nations.
But officials said the meeting, in preparation for a Toronto summit on June 26-27, was unlikely to reach a conclusion on tighter banking regulation or on a proposed bank levy.
"It's important that we understand just how fragile the recovery is," said Trevor Manuel, minister in the presidency for South Africa.
"Economies around the world are raising the spectre of a double-dip recession and this presents the opportunity to take decisions to prevent the world from going into a fresh recession."
World Bank chief economist Justin Yifu Lin said separately the current recovery was the result of fiscal stimulus and inventory buildup. "The foundation for a recovery is still weak, especially in Europe."
Officials are wary of shifting too quickly towards emphasising deficit cuts at the cost of growth, despite the threat of bond markets hammering debt-hit governments.
'We cannot give up fiscal prudence'
"We shall have to achieve economic recovery, at the same time we cannot give up fiscal prudence," India's Finance Minister Pranab Mukherjee said.
"So striking a balance between two apparently contradictory situations is to be achieved. That is the challenge."
Europe's debt crisis will dominate the talks. But ministers are unlikely to single out either the euro or the yuan - which China is under pressure to allow to rise - for specific discussions, a G20 official said.
"This issue may come up but I don't think, as separate individual actions, it will be on agenda items," said Sakong Il, chairperson of Seoul's presidential committee for the meeting in the southern South Korean city of Busan.
There were indications that ministers would struggle to carve out a consensus on how to impose tougher restrictions on the banking sector.
"Further deliberation of this issue" was needed, said Sakong.
The International Monetary Fund is expected to present a revised draft proposal on a bank levy at the meeting, an IMF spokesperson said on Friday.
A final proposal will go to Toronto for review, but US officials say it is unlikely the summit will reach an agreement on a unified approach.
A global banking tax is supported by European powers and the United States but resisted by some developing nations plus Canada and Australia, who argue that they should not have to pay to clear up a mess they did not create.
End to the uncertainty
"Well-placed regulations can achieve the job... we are not in favour of taxing the banks," said Mukherjee, noting that India's banks withstood the turmoil.
South Korea's Finance Minister Yoon Jeung-hyun told reporters the levy issue was unlikely to be decided before a Seoul G20 summit in November.
Yonhap news agency said members at Busan would only agree in principle to try to make the financial sector share the cost of government intervention.
Economies such as the US that are largely financed by markets want banks to have to hold more assets on their balance sheets to protect against any future crises.
But policymakers in continental Europe, where banks provide more financing, worry that higher reserve requirements may hit growth.
Britain's new Chancellor of the Exchequer (finance minister) George Osborne called for an end to the uncertainty over capital requirements for banks.
"One of the things I'll be pressing for is that the agreements that were reached last year - on capital, leverage and liquidity - are now concluded. We want to end the uncertainty," Osborne said in a statement.
- AFP
